Member Article

‘Hard Brexit’ would see City lose passporting rights, cautions German bank president

The City of London stands to lose its access to the European single market if Brexit negotiations result in the UK ducking out of the European Economic Area, according to Bundesbank president, Jens Weidmann.

Speaking to the Guardian, the president of Germany’s central bank said that UK financial firms would no longer be able to operate across the EU’s 27 member states, effectively stripping them of their so-called ‘passporting’ rights which, he said, were directly linked with participation in the single market.

The comments are a blow to the City after a number of eurosceptic Conservatives have begun applying pressure on the Prime Minister, Theresa May, to push for a ‘hard Brexit’ scenario which would see the UK drop out of the single market entirely.

Weidmann said that financial ‘passporting rights are tied to the single market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area’.

Such an outcome would be a boon to other European financial hubs, such as Frankfurt, with financial firms forced to relocate elsewhere in the European Union in order to retain access to the single market in what would be a serious blow to London’s status as a financial hub.

While he does not foresee a flood of financiers to the North German city, Weidmann commented that Frankfurt could still be an attractive option for banks and other financial firms following Brexit.

He added: “Of course several businesses will reconsider the location of their headquarters. As a significant financial centre and the seat of important regulatory and supervisory bodies, Frankfurt is attractive and will welcome newcomers. But I don’t expect a mass exodus from London to Frankfurt.”